INNOBLOG

The recent business week article on 3M discussed an interesting point about tension between Six Sigma and Innovation. James McNerney, former CEO of 3M rolled out six sigma after taking over 3M. The stock market rewarded his initiative but many feel that the company lost its innovative touch. The basic question is " Can six sigma and innovation co-exist in an organization?"

On the surface, there is an inherent tension between Six Sigma and Innovation. Six Sigma aims to take any uncertainities (variability) out of a process while innovation by definition induces uncertainities.

However, six sigma and innovation are both essential for an organization. Six sigma impacts the bottomline while innovation grows the top line. Big companies like P&G and GE have gone on record saying that they are looking for 4-6% organic growth (~growing revenues by billions of dollars every year). They are not going to do this by compromising on process efficiency (six sigma). Can you imagine GE moving away from Six Sigma?

Companies will have to manage both going forward. One has to create different process, structure and culture within a company to efficiently manage both. A recent HBR article by Michael Tushman of Harvard and Charles O' Reilly of Stanford acknowledges the paradox of exploitative versus explorative efforts. Their conclusion is that successful companies are able to separate innovation efforts from continuous improvement efforts.

I do think that a company has to master the art of managing both six sigma and innovation to be competitive.